Could This Be The Perfect Time to Buy

    Is it better to rent or buy a home? This is a question that many consumers ask and the answer will depend on who you ask.  The following article courtesy of dailypress.com gives great insight on the current market.

    The Hampton Roads residential real estate market is turning toward a seller’s market although distressed sales continue to drag down prices, a local economist says.

    “The market is ripe for a takeoff,” Vinod Agarwal, director of Old Dominion University’s Economic Forecasting Project, told members of the Institute for Real Estate Management’s Hampton Roads chapter last week in Chesapeake. “However, median prices have not increased as much, and the prime reason for this, my friends, is distressed sales.”

     The number of regional home sales is increasing, home inventories are dwindling, and homes are spending fewer days on the market, he said. The median sale price of existing homes increased 5.07 percent in 2015, compared to a 1.7 percent boost in 2014 after a 19 percent drop — what Agarwal calls a market correction — from 2007 to 2011.

    So what’s the problem? In 2015, 12.3 percent of existing home sales were bank-owned properties and 6 percent were short sales, according to Agarwal’s presentation. These properties sell at a discount with bank-owned homes selling for almost half the price, which drags down overall home values.

    The number of new construction homes sold increased 18.9 percent last year, comprising 12.5 percent of home sales in the region, according to Agarwal’s presentation.

    Rising rents might be driving home-buying demand. During the housing boom, it was cheaper to rent a three-bedroom house than to buy a median-priced house in Hampton Roads. In 2010, it was more comparable. Last year, the median monthly rent for a three-bedroom house cost $376 more than a monthly mortgage payment, including taxes, for a median-priced existing house, according to Agarwal’s presentation.

    “This tells me it is time to buy and not to rent,” Agarwal said. “Housing is quite affordable these days.”

    Folks in Hampton Roads are spending less of their money on buying homes now than during the boom, he added. In 2006, homebuyers spent 30.6 percent of their monthly median household income on a median-priced existing home. In 2015, that home payment dropped to 19.5 percent of median monthly household income, he said.

    Rising incomes aren’t the reason homes are more affordable, Agarwal said, noting the region has failed to add high-paying jobs in its economic recovery. Lower home prices and continued low mortgage rates are helping residents more, he said.

    As of last week, the 30-year fixed mortgage rate averaged 3.65 percent, according to a Freddie Mac survey of lenders. Last year, the average was 3.85 percent. Agarwal forecasts that the 30-year national conventional mortgage rate would reach no more than 4.25 percent this year.

    Folks in Hampton Roads are already out shopping for homes and loans before the traditional spring home-buying season, said Anthony Rudd Sr., a senior loan officer with Johnson Mortgage Co. in Newport News. Demand is higher in some neighborhoods than others, he noted.

    The recent drop in interest rates and folks getting their income tax refunds might be encouraging activity earlier in the year, Rudd said in a telephone interview. Qualified borrowers of loans backed by the Federal Housing Administration or Department Veteran Affairs could find interest rates as low as 3.25 percent currently, he added.

    Rudd said he isn’t seeing borrowers deciding to buy because of pay raises so much as family changes or leases expiring. The market also typically sees a boost in activity after school lets out, he said.

    After reading the article courtesy of dailypress.com and you want to start your home search, Abbitt Realty Company has all the tools you need to get started! Click here to start your search for your new home.

     

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